Correlation Between Guidepath Tactical and Guidemark Smallmid

Can any of the company-specific risk be diversified away by investing in both Guidepath Tactical and Guidemark Smallmid at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guidepath Tactical and Guidemark Smallmid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidepath Tactical Allocation and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Guidepath Tactical and Guidemark Smallmid and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guidepath Tactical with a short position of Guidemark Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath Tactical and Guidemark Smallmid.

Diversification Opportunities for Guidepath Tactical and Guidemark Smallmid

0.94

Correlation Coefficient

Guidepath Tactical  Guidemark Smallmid

Almost no diversification

The 3 months correlation between Guidepath and Guidemark is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Tactical Allocation and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap and Guidepath Tactical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guidepath Tactical Allocation are associated (or correlated) with Guidemark Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Guidepath Tactical i.e., Guidepath Tactical and Guidemark Smallmid go up and down completely randomly.

Pair Corralation between Guidepath Tactical and Guidemark Smallmid

Assuming the 90 days horizon Guidepath Tactical is expected to generate 1.01 times less return on investment than Guidemark Smallmid. But when comparing it to its historical volatility, Guidepath Tactical Allocation is 1.43 times less risky than Guidemark Smallmid. It trades about 0.09 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,657  in Guidemark Smallmid Cap on September 14, 2024 and sell it today you would earn a total of  612.00  from holding Guidemark Smallmid Cap or generate 36.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Guidepath Tactical Allocation  vs.  Guidemark Smallmid Cap

Guidepath Tactical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Tactical Allocation are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guidepath Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidemark Smallmid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guidepath Tactical and Guidemark Smallmid

The main advantage of trading using opposite Guidepath Tactical and Guidemark Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath Tactical position performs unexpectedly, Guidemark Smallmid can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guidemark Smallmid will offset losses from the drop in Guidemark Smallmid's long position.

The idea behind Guidepath Tactical Allocation and Guidemark Smallmid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.